In addition to their comprehensiveness, these systems of analysis emphasized the interdependence of the several spheres of society: neither polity nor economy nor general culture nor language is self-contained, each has profound impact on the other; society is a set of interacting subsystems. Many of the substantive formulations and contributions these men made are parallel: for example, Weber's emphasis on modern rationalism, Pareto's on logico-experimental knowledge, and Veblen's on matter-of-fact habits of thought. Each takes modern science and technology as a corollary. Their common emphasis is on the fundamental, albeit partly derivative, importance of the modern state; and, inter alia, what may be comprehended as the common interactive tripartite elements of their overall systems: power, knowledge, and psychology.
Veblen was heterodox, iconoclastic, sardonic, caustic, and satiric. He also was brilliant, penetrating, original, courageous, literarily dramatic, and unique, and at the same time possessed of an intellectual distance, if not alienation, from the world around him--a distance that may have been both help and hindrance for his thinking. Some of these characteristics he shared with Weber, others with Pareto, some with both.
The continuing relevance of Veblen's positive analytical work, as Weber's and Pareto's, derives in part from the depth and breadth of his analysis, especially in his timeless work on fundamental matters. His critical work often has devastating implications for existing capitalist society and mainstream economic theory, as well as for Marxism and socialism in general. Its abiding relevance derives from the depth and breadth of its positive analysis on which it rests and the arguable failure of capitalist society and neoclassical theory to change in material respects in the years since wrote. Veblen's continuing relevance is manifest in such areas as the critique of mainstream economics (much of which is a footnote to Veblen); controversies over the relation of deduction and induction (and the status of efforts to produce truth, with or without a capital T) to belief systems and language; disputes about the significance of business mergers and acquisitions, considered as portfolio investment (and not direct contributions to income in the GNP sense), as substitutes for real investment as a principal money-making activity; and, inter alia, questions about the historic meaning and status of socialism.
A System of Preconceptions
Veblen argued that at the deepest structural level mankind pursues its intellectual efforts along paths of certain habits of thought, systems of preconceptions, or prepossessions. These habitualized preconceptions, unrecognized and unchallenged as they are, derive from the practices of ordinary life and the institutional arrangements within which people live. Veblen postulates two principal habits of thought, or systems of preconceptions--the animistic, also called the teleological, and the matter-of-fact.
The animistic or teleological preconception projects a personalized conceptualization of ultimate design, reality, and purpose. It involves, as Veblen portrays it, a combination of projection and ceremonial rationalization, and serves as psychic balm and social control. At its least animistic it is a taxonomic adventure, but more typically it is teleological in its imputation of final causes and inevitability of results. Both center on some notion of the substantiality of reality preeminent in man, the latter, even when creation is understood to be dedicated to the welfare of mankind. Writes Veblen, specifically about classical economics but in terms applicable to all forms of teleological reasoning:
The standpoint of the classical economists, in their highest or definitive syntheses and generalizations, may not inaptly be called the standpoint of ceremonial adequacy. The ultimate laws and principles which they formulated were laws of the normal or the natural, according to a preconception regarding the ends to which, in the nature of things, all things tend. In effect, this preconception imputes to things a tendency to work out what the instructed common sense of the time accepts as the adequate or worthy end of human effort. It is a projection of the accepted ideal of conduct. This ideal of conduct is made to serve as a canon of truth, to the extent that the investigator contents himself with an appeal to its legitimation for premises that run back of the facts with which he is immediately dealing, for the "controlling principles" that are conceived intangibly to underlie the process discussed, and for the "tendencies" that run beyond the situation as it lies before him.
In this context, even the notion of a trend in events imputes purpose to the sequence of events, investing it with a discretionary, teleological character that constrains the steps in the sequences by which the supposed objective result is reached. Not surprisingly, in works (such as Clark's) that give effect to this preconception, nuances of a beneficent end are present as are "provocations to homiletic discourse." While overtly taxonomic, such analysis subsumes "its data under a rational scheme of categories which are presumed to make up the Order of Nature," giving effect to a range of preconceptions with one metaphysical ground, that there is one right and beautiful definitive scheme of economic life, "to which the whole creation tends." Earlier economists "were believers in a Providential order, or an order of Nature...conceived to work in an effective and just way toward the end which it tends; and in the economic field this objective end is the material welfare of mankind." Even Adam Smith's economics, for all its matter-of-fact elements, is driven by a "preconception of a normal teleological order of procedure in the natural course" which "affects not only those features of theory where he is avowedly concerned with building up a normal scheme of the economic process." By normalizing "the chief causal factor engaged in the process, it affects also his arguments from cause to effect."
What is true of mainstream economics, according to Veblen, is also true of historicist economics, whether Marxian or non-Marxian. Thus Wilhelm Roscher's metaphysical postulates were "the common-sense, commonplace metaphysics afloat in educated German circles in the time of his youth," a Hegelian metaphysics "of a self-realizing life process...of a spiritual nature. . .essentially active, self-determining, and unfold[ing] by inner necessity," for which "the laws of the cultural development with which the social sciences, in the Hegelian view, have to do are at one with the laws of the processes of the universe at large..." Moreover, "the universe at large is itself a self-unfolding life process, substantially of a spiritual character, of which the economic life process is but a phase and an aspect." As for Marx, Veblen sees him as combining materialistic Hegelianism and English natural rights, reaching polemical conclusions that "run wholly on the ground afforded him by the premises of that school" and whose "ideals of.. .propaganda are natural-rights ideals," especially the ideal of the right of labor to the whole product of labor.
The matter-of-fact preconception is concerned with observable phenomena and material cause and effect studied in an impersonal and dispassionate way. It focuses on process rather than predetermined outcomes, narrows "the range of discretionary, teleological action to the human agent alone," is concerned with "the questions of what men do and how and why they do it," and comprehends causation "in an unbroken sequence of cumulative change." These are the characteristics that have made for the primacy of science.
A critical difference between the two types of preconceptions centers on the nature of social change. For Veblen the crux of the matter is that matter-of-factness has enabled a specifically Darwinian conception of change as an unfolding sequence without necessary ultimate meaning rather than one or another animistic or teleological conception. The Darwinian conception is of a "run of causation unfold[ing] itself in an unbroken sequence of cumulative change," involving a process of natural or artificial human purpose and choice, one not driven by some transcendental predetermined end but by the interaction of actors and forces under changing natural and social circumstances.
Post-Darwinian science, says Veblen, focuses on the process of causation rather than "that consummation in which causal effect was once presumed to come to rest." It is "substantially a theory of the process of consecutive change, realized to be self-containing or self-propagating and to have no final term." The questions of class that occupy the modern sciences are "questions of genesis, growth, variation, process (in short, questions of a dynamic import)," understood in terms of open-ended cumulative causation. For economics to be an "evolutionary science," it "must be the theory of a process of cultural growth as determined by the economic interest, a theory of a cumulative sequence of economic institutions stated in terms of the process itself."
Societies historically have been blends of both habits of thought, though increasingly the latter, which is the mark of modernity. Pragmatic considerations have always been present, even in substantially animistic societies. Modern science, and with it technology, exist in a mutually reinforcing relationship with the matter-of-fact habit of thought, though there are residues of teleological preconceptions in modern society. The history of economic theory is a history, accordingly, of both the continuing co-existence of teleology and matter-of-face theorizing and the gradual eclipse, but by no means total elimination, of the former. The history of the science, he says, "shows a long and devious course of disintegrating animism."
The preconceptions, the animistic-teleological or the matter-of-fact doctrines, come into being as part of what amounts to Veblen's large-scale model of society which, unfortunately, is nowhere completely spelled out, though he insists upon both the key roles of culture and the state of the industrial arts (technology) and the general interdependent nature of the system. The elements of this model include human nature, the material environment, institutions, technology, general culture, and belief system (predicated upon preconceptions). Varying formulations of this general model are given in different contexts. Preconceptions are the product of both the state of the industrial arts, and the habitualized practices to which they give rise, and the institutional structure under which the community lives, but the "state of the industrial arts is dependent on the traits of human nature, physical, intellectual, and spiritual, and on the character of the material environment." Change in the preconceptions "is closely correlated with an analogous change in institutions and habits of life, particularly with the changes which the modern era brings in industry and in the economic organization of society." In the modern era, "Science and technology play into one another's hands." More generally,
...the canons of validity under whose guidance [the scientist] works are those imposed by the modern technology, through habituation to its requirements; and therefore his results are available for the technological purpose. His canons of validity are made for him by the cultural situation; they are habits of thought imposed on him by the scheme of life current in the community in which he lives; and under modern conditions this scheme of life is largely machine-made. In the modern culture, industry, industrial processes, and industrial products...have become the chief force in shaping men's habits of thought. Hence men have learned to think in the terms in which the technological processes act. This is particularly true of those men who by virtue of a peculiarly strong susceptibility in this direction become addicted to that habit of matter-of-face inquiry that constitutes scientific research.
In two words, cumulative causation. "And so long as the machine process continues to hold its dominant place as a disciplinary factor in modern culture, so long must the spiritual and intellectual life of this cultural era maintain the character which the machine process gives it"--though the predominance of the machine process is itself a dependent variable. The "fabric of institutions intervenes between the material exigencies of life and the speculative scheme of things," in such a way that habits of thought "reflect the habits of life embodied in the institutional structure of society" which "is a matter of law and custom, politics and religion, taste and morals" and with respect to which "the speculative generalizations, the institutions of the realm of knowledge, are created in the image of social institutions of status and personal force.. ."
In addition, practice is always pragmatic but it is not always matter-of-fact. Economic "change is always in the last resort a change in habits of thought"; the habits of thought formed in any one line of experience affect thought in any other; varying combinations of disciplines of the mind produce different social results; and so on. There is a strong technological determinism here, but, because it must be comprehended in terms of a much larger model, perhaps better expressed as conditionism: ".. .under the Darwinian norm the question of whether and how far material exigencies control human conduct and cultural growth becomes a question of the share which these material exigencies have in shaping men's habits of thought."
In emphasizing the role of fundamental structuring preconceptions or habits of thought, Veblen can be understood as emphasizing the difference between the terms (language, discourse) in which people express their understanding of nature, society, and mankind, and the arguable actual facts of the matter. As our preconceptions change, even conceptions of the deity change. What we perceive to be "the facts" is preconception-laden. Phenomena do not define themselves; meaning is imputed by the observer. What happens cannot appear to us except on the ground or through the mediating-defining influence of some preconception of prepossession.
An encompassing theme in Veblen's thought is the discourse-forming role of preconceptions in the history of economic and other areas. Says he, "The ultimate term or ground of knowledge is always of a metaphysical character. It is something of a preconception, accepted uncritically, but applied in criticism and demonstration of all sense..." Veblen was one of the earliest thinkers concerned with the social construction of meaning, rather than with the absolute category of truth, and with the formation of knowledge and/or belief as a product of group life, in particular institutional and cultural contexts.
Veblen was very adroit with words, especially in his ability to foment tone and attitude. Consider the evocative power of the sentence, "The gallantries, the genteel inanities and devout imbecilities of mediaeval high-life would be insufferable even to the meanest and most romantic modern intelligence"--evocative, to be sure, but descriptive and judgmental at once. Consider, too, his dramatic use of obsolete words to evoke the archaic: "If we are getting restless under the taxonomy of a monocotyledonous wage doctrine and a cryptogamic theory of interest, with involute, loculicidal, tormentous and moniliform variants, what is the cytoplasm, centrosome, or karyokinetic process to which we may turn, and in which we may find surcease from the metaphysics of normality and controlling principles?" The message is not left implicit: "There is the economic life process still in great measure awaiting theoretical formulation."
Veblen argues that people, for the most part, accept what is said and think uncritically within the preconceptions and habits of thought that have become part of them through socialization or enculturation. Beliefs and facts are system-specific. Veblen affirms and lauds modern Darwinian, or evolutionary, science, and the matter-of-fact preconception, or habit of thought, on which it rests. But he clearly and unequivocally affirms the preconceptional nature of matter-of-factness and cumulative causation (in which metaphysical respects teleological habits of thought are substantively but not discursively different); the preconception- or system-specificity of belief; the consequent normative status of belief; and, moreover, the applicability of these ideas to his own thinking. It will surprise no one that Veblen's critiques of mainstream economic theory and of capitalism derive from the arguments so far summarized and expand upon them.
Veblen's critique of orthodox theory includes the following interrelated arguments or themes:
1) Economic theory has become increasingly matter-of-fact but inevitably continues to have teleological elements. In this respect, the economist is like other people: "He is a creature of habits and propensities given through the antecedents, heredity and cultural, of which he is an outcome; and the habits of thought formed in any one line of experience affecting his thinking in any other."
2) Economic theory, as we have already seen, serves the function of ceremonial adequacy, that is, social control and also psychic balm. As such it represents and replicates "in large part the point of view of the enlightened common sense of [the] time." It is too ready to accept the ground of sufficient reason rather than insist on the ground of efficient cause. It is also too useful for casting luster and reinforcing vested interests.
3) The defect of economic theory lies not in its lack of factual realism but in its failure to be evolutionary in the Darwinian manner, focusing on development in a self-generating process of cumulative causation and unfolding sequence encompassing all the variables found in Veblen's general model.
4) The foregoing defect is especially clearly manifest in orthodox theory's conception of man as an isolated, passive responder to external stimuli and not as an effectively purposive economic agent participating in larges processes. Veblen's description of this conception has appropriately been widely quoted:
The hedonistic conception of man is that of a lightning calculator of pleasures and pains, who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact. He has neither antecedent nor consequent. He is an isolated, definitive human datum, in stable equilibrium except for the buffets of the impinging forces that displace him in one direction or another. Self-imposed in elemental space, he spins symmetrically about his own spiritual axis until the parallelogram of forces bears down upon him, whereupon he follows the line of the resultant. When the force of the impact is spent, he comes to rest, a self-contained globule of desire as before. Spiritually, the hedonistic man is not a prime mover. He is not the seat of a process of living, except in the sense that he is subject to a series of permutations enforced upon him by circumstances external and alien to him.
As a corollary, Veblen argues that orthodox theory fails to consider the respects and means whereby culture and institutions, such as that of private property, affect human action.
5) Orthodox theory maintains the fundamental presumption of capitalist society, that to have an income means that one has been productive, disregarding what Veblen considers to be fundamental, namely, the distinction between industry and pecuniary pursuits, or between making goods and making money. Veblen is not prepared to assume, along with orthodox theorists, even as a major tendency, that any business adjustment or any action acquisitive of profit is presumptively instrumental of the welfare of mankind, or, in his language, to the serviceability of the community. As Veblen puts it, "the classical theory of production is in good part a doctrine of investment in which the identity of production and pecuniary gain is taken for granted," an assumption he vehemently rejects.
The Nature of Capital
Veblen's writings on industrial and pecuniary employments and on the nature of capital present the core of what subsequently became a key thesis for Veblen and for those who follow in his analytical footsteps: the distinction between industrial and pecuniary, between making goods and making money. The production of goods is only incidental and by no means necessary to the acquisition of income. To Veblenians, the distinction is amply manifest in corporate mergers and acquisitions, hostile or friendly, in which real capital assets merely change ownership hands, and in which activity is directed toward reaping monetary rewards without adding to the production of serviceable goods; portfolio manipulations do not constitute real investment.
In Veblen's view, returns from both tangible and intangible assets are due to the differential advantages accruing to the owners, advantages typically arising from their class position or with the assistance of government, for example, through the law of property, advantages which enable the owners to engross, as he puts it, part of the flow of income. This approach, it should be noted, rejects both the orthodox productivity and the Marxian exploitation paradigms in favor of what may be called the Veblen-Weber paradigm, of appropriation, in which income (and wealth) is distributed on the basis of a meeting of complex forces in the political economy, without normative status except insofar as ideology and general social control impute such status.
For Veblen, the capitalized value of assets is a function of their income-yielding capacity to their owner. In the case of tangible assets, the presumption is made that the objects of wealth involved have at least some potential serviceability at large, since they serve materially productive work. In the case of intangible assets, which largely derive from the creation of pecuniary arrangements, there is no presumption that the objects of wealth have any serviceability at large, since they do not serve materially productive work, but only a differential advantage to the owner in the distribution of the industrial product. Serviceability and claims to income are two different matters.
One final set of principal topics warrants attention. For Veblen the economist must consider: 1) purposive and habitual action by individuals; 2) methodological individualist and methodological collectivist methodologies; and 3) deliberative and nondeliberative social control (the collective correlation to the first). Veblen is justly known for his criticisms of hedonistic rationality, but this criticism has several elements. The individual is heavily motivated by habit, custom, institutions, and status emulation; and the individual has its own teleology or purposes, however much these may be socially generated or influenced. Veblen does not insist on either habit, purpose, or socialization alone, but on all in concert. His understanding of the inevitability of the combination of methodological individualism and methodological collectivism is brilliantly expressed in these excerpts:
The growth and mutations of the institutional fabric are an outcome of the conduct of the individual members of the group, since it is out of the experience of the individuals, through the habituation of individuals, that institutions arise; and it is in this same experience that these institutions act to direct and define the aims and end of conduct. It is, of course, on individuals that the system of institutions imposes those conventional standards, ideals, and canons of conduct that make up the community's scheme of life. Scientific inquiry in this field, therefore, must deal with individual conduct and must formulate its theoretical results in terms of individual conduct. But such an inquiry can serve the purposes of a genetic theory only if and in so far as this individual conduct is attended to in those respects in which it counts toward habituation, and so toward change (or stability) of the institutional fabric, on the one hand, and in those respects, in which it is prompted and guided by the received institutional conceptions and ideals on the other hand. The postulates of marginal utility, and the hedonistic preconceptions generally, fail at this point in that they confine the attention to such bearings of economic conduct as are conceived not to be conditioned by habitual standards and ideals and to have no effect in the way of habituation.
Nor is it conceived [by marginal utility economics] that the presence of this institutional element in men's economic relations in any degree affects or disguises the hedonistic calculus, or that its pecuniary conceptions and standards in any degree standardize, color, mitigate, or divert the hedonistic calculator from the direct and unhampered quest of the net sensuous gain. While the institution of property is included, it is allowed to have no force in shaping economic conduct, which is conceived to run its course to its hedonistic outcome as if no such institutional factor intervened between the impulse and its realization presumed to give rise to no habitual or conventional canons of conduct or standards of valuation, no proximate ends, ideals, or aspirations.
It should be obvious that Veblen's ideas and theories are subject to criticism. For all his incisive brilliance, he may be wrong. Even where he is correct, the Paretian doctrine of the social utility of falsity, or the Marxian doctrine of false consciousness viewed in a non-Marxian manner, this may pertain: a society may mislead itself, say, through animistic or teleological reasoning, but this may be essential for the operation of society and its transformation into a more modem society.
When Veblen says that, because of the pressure of modem industrial or technological exigencies, "it is only a question of time when that (substantially animistic) habit of mind which proceeds on the notion of a definitive normality shall be displaced in the field of economic inquiry by that, substantially materialistic, habit of mind which seeks a comprehension of facts in terms of a cumulative sequence," he is surely ignoring the psychic balm function of economics as well as the social control function which puts psychic balm solutions to additional effective use. He has also been empirically wrong. While the tendency he lauds is present, it remains swamped by another set of preconceptions. Teleological ideology seems inevitable.
Veblen then argues that the emulative system with its struggle for economic respectability on which capitalism rests breeds discontent with the institution of private property and "is one of the causes, if not the chief cause, of the existing unrest and dissatisfaction with things as they are." Indeed, says he, it is "necessarily adverse to the institution of private property, and therefore adverse to the existing industrial system of free competition." He is certainly correct to say that "the outcomes of modem industrial development has been, so far as concerns the present purpose, to intensify emulation and the jealousy that goes with emulation, and to focus the emulation and the jealousy on the possession and enjoyment of material goods." But to one writing one hundred after these words were published, it seems that while Veblen may be empirically correct in his interpretation of social discontent, there certainly has been no diminution of status emulation, "the struggle to keep up appearances." Neither does it seem that discontent with private property as an institution has grown. This, of course, does not mean that the contradiction between emulation and private property Veblen noted has not manifested itself in institutional change.
Furthermore, Veblen distinguishes between valuation, production, and distribution. Valuation, he urges, is a pecuniary matter, fundamentally related to acquisition and thus to distribution. In this he is surely correct. He says, "Ownership, no doubt, has its effect on productive industry, and, indeed, its effect upon industry is very large...but ownership is not itself primarily or immediately a contrivance for production." It touches directly "the results of industry, and only indirectly the methods and processes of industry." A conservative economist would not be incorrect to emphasize that the security required for production is provided, willy nilly, by the institution of ownership, but my point is a different one. Consider Veblen's related argument that "pecuniary capital is a matter of market values, while industrial capital is, in the last analysis, a matter of mechanical efficiency, or rather of mechanical effects not reducible to a common measure or a collective magnitude," and that "capital pecuniarily considered rests on a basis of subjective value; capital industrially considered rests on material circumstances reducible to objective terms of mechanical, chemical and physiological effect." The problem is not in the distinction but in its force: Capital, industrially considered, produces goods, but which goods? Somehow society must decide whose interests--whose subjective valuation--are to count in determining the allocation of resources and the production of real goods and services. For Veblen, technological change and resource allocation, it should be noted, are in fact influenced by pecuniary factors.
This consideration is underscored by Veblen's candid recognition, given his stress upon state of the industrial arts, that "technological proficiency is not of itself and intrinsically serviceable or disserviceable to mankind--it is only a means of efficiency for good or ill." The question is, serviceable to whom? The owner or the community? And if the community, how are different and conflicting serviceabilities to be reconciled? Matter-of-factness, science, the machine process, and culture may be interpreted or evaluated differently: "Seen in certain lights, tested by certain standards, it is doubtless better; by other standards, worse." The results of technology are not conclusively good. Subjective, normative inputs are necessary.
In an essay published in 1906, Veblen wrote, "It is not the Marxism of Marx, but the materialism of Darwin, which the sociologists of today have adopted." Granted the place of pragmatic adjustments in Marxian theory (abetted by its dialecticism), as well as practice, it does not seem that Marxists have become Darwinists. There continues to this day controversy within Marxism between the deterministic and the conditionistic interpretation of Marx's dialectical materialism, but neither the latter nor, certainly, the former are evidently Darwinian in the manner understood by Veblen.
Finally, we are entitled by Veblen's own argument to ask of him the very question he posed to other schools of thought: What is reality (and in what sense of "reality")and what is preconception? We must take seriously the self-referential character of his argument. Of the "cumulative process of development, and its complex and unstable outcome, that are to be the economist's subject-matter," what is objective and what is subjective; what is a matter of preconception and what is independent of preconception; what precisely produces that which is matter-of-fact; and what putative status are we to ascribe to "knowledge"? These are serious questions the answers to which are not self-evident, even after reading Veblen and especially after such writers as Richard Rorty, Mary Douglas, Peter Berger, Michel Foucault, and Jerome Brunner. Veblen's argument about preconception is truly for the ages: belief, even in Veblen, must be held with some diffidence. But if Veblen's Darwinism is correct, then what of a society in which belief is in fact held with a sense of diffidence? After all, it is not too much to say that Veblenian ideas are part of the Darwinian process of cumulative variation and selection. And that fact thereof may be the greatest monument to Veblen--who, of course, did not have good things to say about such ceremonial fetishes as monuments!
